Initially, the scheme will apply solely to organisations whose annual half hourly metered electricity use is over 6,000 Megawatt hours (MWh) - typically those that spend £0.5 million a year on electricity.
But all individuals and organisations who wish to cut their energy bills - regardless of their size or whether they are participating in the scheme - can find assistance through the Carbon Trust, which provides practical advice on how to improve energy efficiency and develop low carbon products and services.
The three year Introductory Phase of the scheme starts on 1st April 2010.
Participating organisations will have to register with the UK Environment Agency who will administer the scheme. The registration window will begin in April and last until the 30 September 2010.
During this first year (2010/11), organisations will only have to report emissions, and an unlimited number of carbon gas emission allowances will be available at a fixed price of £12/tCO2. Participants in the scheme will also receive a revenue recycling payment each year.
From the second year (2011/12), scheme participants will have to purchase annual carbon gas emission allowances, monitor energy use, report emissions and also surrender allowances. But organisations that take early action to improve energy efficiency, e.g., by using onsite renewable energy like wind turbines or solar panels, will receive extra weighting, and increased carbon savings from such measures will be published.
In the Second Phase of the scheme, beginning in 2013, the Government will cap the number of carbon gas emission allowances available each year and all allowances will be auctioned. The cap will be set in 2010 after the Government takes advice from the Committee on Climate Change.
About the Carbon Reduction Commitment
The Carbon Reduction Commitment is a UK environmental law policy scheme. The new eco incentives to reduce energy & save money have been developed by the Department of Energy and Climate Change, in partnership with the devolved Scottish Government, the Welsh Assembly Government and the Department of the Environment Northern Ireland.